Staying ahead of the game: innovations for corporations

No one doubts the need for companies to stay innovative, no matter how big and successful they might be right now. But if anyone needs a reminder of why this is important, there is always the cautionary tale of Kodak, the U.S. company that dominated the photography market for much of the 20th century.

“Kodak was the Google of its day and age,” Jonas Ridderstråle, a visiting professor at Ashridge business school in the U.K., told the Corporate Innovations conference at the Skolkovo Technopark on Thursday.

“No one had smarter engineers or a larger research budget. Yet a few years ago, Kodak was forced to file for bankruptcy,” Ridderstråle said in his keynote address.

Kodak “completely misread the strategic implications of digitalization,” said the Swedish business guru. “They expected us to sit at home and print picture after picture, when it turned out that an absolute majority of us were a lot more interested in sharing those pictures with people all over the world virtually. A couple of months after Kodak went belly-up, Facebook bought a company called Instagram for $1 billion. It had 12 employees at the time and had been up and running for about 18 months,” said Ridderstråle, the author of books including “Re-energizing the Corporation: How leaders make change happen.”

Corporations might clearly understand the need to stay ahead of their game, but be less sure about how to go about doing so. The Corporate Innovations conference brought together dozens of representatives of major corporations – both Russian and international – to discuss and exchange experience of working with startups to remain innovative, and share their lessons and mistakes.

One of the key goals of the Skolkovo innovation centre is to help the innovative solutions created by tech startups reach the companies where they could be useful, said acting Deputy Prime Minister Arkady Dvorkovich.

“At Skolkovo, we have managed to lay the foundation for the advancement of all the key areas of Russia’s innovative development,” he said at the conference’s opening.

“Right from the very beginning [of Skolkovo’s creation], we understood the risks associated with the progression from the stage of research and development to products that are in demand on the market and by consumers. That risk is always there for any company. Our task is to minimize those risks and make the path from an idea to its implementation as short and smooth as possible,” said Dvorkovich.

Representatives of dozens of international and Russian corporations were due to attend the event. Photo: Sk.ru.

The deputy prime minister said that large companies should actively formulate their needs for the kinds of inventions being developed at Skolkovo.

“We will continue to push major companies – both Russian and foreign – towards this activity because we genuinely believe that it can be mutually beneficial to both the companies themselves, since they need to keep moving forward and finding ideas that are attractive to the market, and to the Skolkovo Foundation and its startups,” said Dvorkovich.

Kirill Kaem, the Skolkovo Foundation’s senior vice president for innovations, said the foundation was ready to share with corporations its eight years’ experience of assessing and assisting innovative startups.

“We’re capable of scouting out the technologies that our industrial partners need, and we’re open to requests from companies too,” he told the conference, noting that the foundation’s experts have screened 15,000 tech projects during the process of selecting the 1,800 resident startups that the foundation currently has.

“Skolkovo is largely seen as a nest for startups,” said Kaem.

“It’s important for us that Skolkovo is seen as a place where our partners can find a solution to any problem they have,” he added. The Skolkovo Foundation has over 70 industrial partners, including Boeing, Cisco, General Electric, Johnson & Johnson and Panasonic, many of which have R&D facilities or offices inside the Skolkovo innovation city.

Jonas Ridderstråle, a Swedish business guru and the author of several books. Photo: Sk.ru.

Ridderstråle argues that it is inevitable that new technology and discoveries will destroy some of what preceded them.

“When some create, per definition, they will destroy others. That is the process of innovation, of disruption and of creative destruction,” he told the conference.

“It’s happening in industry after industry: new commerce entering that industry with a revolutionary business model, an innovation. It may not necessarily be a technological innovation, but innovation is permeating everything we do and see.”

Therefore, in order to remain successful, companies have to come up with new ideas – otherwise, their competitors will, warned Ridderstråle. But this is easier said than done. At the top of many companies, a gang of “counter-evolutionaries” can be found, he argues: people who don’t want any change at all.

“In a knowledge society, you get to the top of an organisation by being an expert on what was important yesterday. But since your entire power is based on what was important yesterday, you have great incentives to make sure that what was important yesterday is also important today – and tomorrow, and next week and so on,” he said.

This is what sets innovative companies apart, he believes.

“Innovative leaders know that unless you get transfusion of new ideas, people and perspectives, you will not stand a chance. You will not be sustainable in your competitiveness,” said Ridderstråle.

Kirill Kaem, senior vice president for innovations of the Skolkovo Foundation. Photo: Sk.ru.

In her book, “The Innovation-Friendly Organization: How to cultivate new ideas and embrace the change they bring,” the British author Anna Simpson argues that the freedom and confidence to float ideas are crucial to create conditions that facilitate innovation.

“A new idea is delicate. It can be killed by a sneer or a yawn,” she quotes the Roman poet Ovid in the opening of her book. And her conclusion is that for a company to embrace innovation, in this respect, not much has changed.

“The key factor for success is whether or not the team members feel able to take risks. They have to feel safe and comfortable sharing ideas and trying something new,” just as Ovid had found all those years ago, Simpson said in a talk at the Skolkovo Technopark last year.

Ridderstråle agrees, noting that innovation is risky business, and that contradicts the human survival instinct that has programmed us to avoid risk and uncertainty.

“When you experiment and try things out, every once in a while, you’ll fail,” he told the Corporate Innovations conference.

“Mistakes will be made. So any organisation that aspires to be innovative of course needs to have a very high level of tolerance for mistakes. As a leader, you have to be supportive and forgiving, otherwise innovation will not happen.”